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PORTSMOUTH PORT DEVELOPMENT STUDY FINAL REPORT Prepared for: OFFICE OF STATE PLANNING STATE OF NEW HAMPSHIRE 2 1/2 BEACON STREET CONCORD, NEW-HAMPSHIRE 03301 Prepared by: TEMPLEF BARKER & SLOANEm, INC. 33 HAYDEN AVENUE LEXINGTON, MASSACHUSETTS 02173 .In Conjunction With: SEAREACH 27 CONGRESS STREET SALEMy MASSACHUSETTS 01970 June 30, 1986 lum an 4ift am an PORTSMOUTH PORT DEVELOPMENT STUDY FINAL REPORT Prepared for: OFFICE OF STATE PLANNING STATE OF NEW HAMPSHIRE 2 1/2 BEACON STREET CONCORD, NEW HAMPSHIRE 03301 Prepared by: TEMPLEs, BARKER & SLOANE,.INC. 33 HAYDEN AVENUE - LEXINGTON, MASSACHUSETTS 02173 :r In Conjunction With: SEAREACH 27 CONGRESS STREET SALEM, MASSACHUSETTS 01970 The New Hampshire Coastal Prograrn provided a grant for the preparation of this report which was funded in part by the CZMA- of 1972 as amended as administered by the OCRM, NOAA. June 30, 1986 womwman mom t0ftwl M, Oman sm-mlon CONTENTS I. INTRODUCTION II. OVERVIEW OF ACTIVITIES WITHIN THE PORTSMOUTH PORT REGION III. PREPARATION AND SELECTION OF DEVELOPMENT OPTIONS IV. EVALUATION OF SELECTED OPTIONS V. IMPLEMENTATION PLANS VI. RECOMMENDATIONS -low. M M IM as, M am OW. 4M M I. INTRODUCTION Temple, Barker & Sloane, Inc. (TBS), in conjunction with Seareach, was retained by the New Hampshire office of State Planning to conduct a study of development options for the Portsmouth Port Region (PPR). The PPR encompasses the New Hampshire Piscataqua River waterfront from open ocean to the tank farms at Newington--a distance of 4.5 miles. The region includes the municipalities of Newcastle, Portsmouth, and Newington. The study scope encompassed the following five tasks: --Task I: Assessment --Task IT: Preparation of Development Options --Task TIT: Detailed Evaluation of Selected options --Task IV: Selection of Development Options --Task V: Preparation of an Implementation Plan The objective of the study was to identify the development option(s) that .offered the greatest potential for meeting existing water-dependent demand on the PPR and enhancing economic growth. Introduction This report summarizes the materials and findings contained in four interim task reports filed by TBS/Seareach. The report is into six chapters as follows: --I: Introduction --II: overview of Activities Within the Portsmouth Port Regio --III: Preparation and Selection of Development Options --IV: Evaluation of Selected Options --V: Implementation Plans --VI: Recommendations 2 II. OVERVIEW OF ACTIVITIES WITHIN THE PORTSMOUTH PORT REGION This chapte r is organized into four sections as follows: � Profile of the Portsmouth Port Region (PPR) � Activity at the Port Authority State Pier � Strengths and Weaknesses of the State Port Authority � Summary PROFILE OF THE PPR Marine Cargo Activities o Major commercial marine facilities located along the New Hampshire side of the Piscataqua River are shown in Figure II-1. e Eight major industrial users are located along the Piscataqua River. They are: C. H. Sprague, New England Tank & Fuel Storage Corporation, Simplex Wire and Cable, Public Service Company of New Hampshire, National Gypsum, John T. Clark (State Pier), Granite State Minerals, and Portsmouth Naviga- tion. In total, these firms employ an estimated 770 workers in these operations, excluding ancillary truckers and outside vendors. mmm@"Mm@ mm"Wm M overview of Activities Within the PPR Marine Cargo Activities (continued) � Commercial marine facilities operated by these users include four petroleum terminals, one general cargo terminal, two dry bulk terminals, a specialty terminal, two cruise line docks, the State Fish Pier, and facilities for berthing tugboats and environmental research vessels. Several of the terminals serve more than one user. � With the exception of the State Port Authority and Fish Piers, the private sector controls all industrial facilities. � Five terminals, serving multiple users, handle petroleum products in the Port of Portsmouth. This includes partial use of the National Gypsum terminal by Northeast Petroleum. Assuming 30 percent dedication of the National Gypsum terminal to petroleum handling, annual capacity of the PPR for handling petroleum and petroleum products is estimated to be 6.8 mil- lion tons. This capacity is considered to be adequate to accommodate the PPR's anticipated demand for petroleum-based products. � The Granite State Mineral Company and National Gypsum Company wharves handle dry bulk salt and gypsum, respectively. Granite State uses mobile cranes for unloading vessels while National Gypsum relies on self-unloading vessels. Granite State is constrained by land availability at the termi- nal. National Gypsum could resolve any potential constraint on available land through vessel and production scheduling. Annual capacity for dry bulk commodities in the Port of Portsmouth is estimated at approximately 750,000 tons. This capacity is considered ample to accommodate anticipated volumes, although capacity at the Granite State Minerals facility could become a constraint. 4 overview of Activities Within the PPR Non-Marine Cargo Activities � Non-cargo activities were separated into two types--water-dependent and water-enhanced. Recreational boating, commercial fishing, tourboat activ- ity, and party boat activity are water-dependent since without a water resource, such as a river or ocean, they would not exist. Water-enhanced activities are those whose operations significantly benefit from a water -resource, but whose existence is not contingent on a direct relationship wit'h the water resource. Examples of water-enhanced activities are the tourist industry and the general residential, retail, commercial activity along the waterfront. Water-Dependent Activities: Fishing � Commercial fishing, including lobstering, is a major water-dependent activ- ity in the PPR. � Approximately 85 percent of the finfish and 40 percent of the lobsters landed in the State are landed in the PPR. Approximately 150 fishermen, 100 to 120 crew members, and 120 lobstermen fish out of the New Hampshire side of the river on a full-time basis. � Much of the fishing activity, excluding lobstering, that occurs within the PPR is,accommodated at the State Fish Pier. While a half dozen lobster boats in the Piscataqua River utilize the State Pier, the majority of the vessels land their catch at private docks or at takeout locations connected with retail/wholesale outlets. The closing of the American Trawler facility and potential growth of the New Hampshire fishing industry could lead to unfulfilled demand for fish landing facilities. Overview of Activities Within the PPR Water-Dependent Activities: Recreation e Although New Hampshire has only 18 miles of coastline, the coastal area has become the focus for an active water-based recreation area for southern New Hampshire, southern Maine, and northern Massachusetts residents. e Both Rye and the Hampton/Seabrook areas are popular recreational boating areas. Because of the strong current and tidal conditions on the Piscata- qua River, restricted access because of bridge conditions, and a general lack of public facilities, most of the river's boating activity occurs in the backchannel area of Newcastle or in Pepperill Cove in Kittery, Maine. e The waiting lists for slips and moorings in the PPR and Kittery, are 142 and 200, respectively. Because additional facilities are not being devel- oped to meet this demand (at least to a significant degree), the waiting lists have remained relatively static. Boaters typically wait four to six years to be assigned a mooring. Water-Dependent Activity: Tourboats e Currently, two tourboat services are located in the PPR--Viking Cruises and Portsmouth Harbor Cruises. Viking Cruises (Viking of Yarmouth, Inc.) offers inland cruises along the Piscataqua River Basin, short ocean cruises to the Isles of Shoals off the coast, and feeder services to the Shoals Marine Laboratory and Star Island conference facilities, both of which are located on the Isles of Shoals. e Additional water-dependent activities within the PPR include visits by Tall Ships and U.S. and foreign naval vessels, the Prescott Park "gundalow," and sailboat charters. 6 Overview of Activities Within.the PPR Water-Enhanced Activity � While the tourist industry is not directly dependent on the PPR's water resources, tourist activities are enhanced by the presence of these water resources. The current location of water-enhanced tourist attractions, such as the Strawberry Banke settlement, are important factors in the economic composition of the PPRIs waterfront. � Major tourist activities benefitting from Portsmouth's waterfront include: --Strawberry Banke settlement, located on the waterfront behind Prescott Park --Prescott Park --Theater by the Sea --Children's Museum --Market Square Day Festival --The Prescott Park Art Festival ACTIVITY AT THE PORT AUTHORITY STATE PIER e The New Hampshire State Port Authority facility is the principal general cargo terminal in the PPR, handling scrap metal, lumber, containers, and miscellaneous general cargoes. The terminal is operated by John T. Clark and Son Stevedores under a 20-year lease with the New Hampshire State Port Authority. The facility encompasses one berth, two transit sheds with a total of 50,000 square feet of covered space, and approximately 10 acres of open storage space. mobile cranes and forklift trucks are used for for loading/discharging cargoes. The terminal is served by rail (Boston & Maine) and has excellent highway connections to route 1-95. 7 overview of Activities Within the PPR ACTIVITY AT THE PORT AUTHORITY STATE PIER (continued) Iron and steel scrap and containerized general cargo are the major cargoes handled at the State Pier. The exporting of steel scrap is the dominant activity at the facility. Historically, scrap shipments have approximated 150,000 short tons per year shipped. 9 Containerized general cargoes are handled on a weekly basis by the Yankee Clipper, a small container ship operated by Hapag-Lloyd. Hapag-Lloyd uses this vessel to feed New England container cargoes to/from its Canadian- Transatlantic linehaul vessels at Halifax. The Yankee Clipper calls Boston on Wednesdays and Portsmouth on Thursdays, then returns to Halifax where it links up with the Transatlantic linehaul services. 9 Imports of beer, wine, and spirits for the Maine Liquor Commission and .exports of general merchandise are the principal containerized cargoes handled at the State Pier. The State Pier facility also handles other miscellaneous cargoes, lumber being the major one. Cargo tonnage has grown significantly during the seven-year period for which data is available (see Exhibit II-1). Scrap metal exports are now double the 1978 level. Container cargoes have varied from 7,793 to 24,305 short tons during the period while other cargoes have ranged from 2,626 to 55,864 short tons. 8 overview of Activities Within the PPR Financial Performance The Port Authority incurred losses for fiscal years 1979-1982 as shown in Exhibit 11-2. A restructuring of John T. Clark's terminal lease arrange- ment, an increase in mooring revenues, and a reduction in debt service obligations resulted in profitability in fiscal years 1983 and 1984. e The financial performance of the Port Authority during FYs 1985 and 1986 is expected to continue to improve due to increased scrap exports and the signing of a new lease with Viking Cruises covering the period 1986 to 1992. In addition, negotiation of a new base rent with the John T'. Clark Company for the period 1987 to 1992 should further improve financial per- formance. STRENGTHS AND WEAKNESSES OF THE STATE PORT AUTHORITY Strengths 9 The principal advantages of the Port Authority facility in competing for containerized cargoes are the specialized service the Port Community can offer ease of access to and from the Port Authority Pier for delivering and receiving cargoes, competitive service frequencies and transit times to and from the United Kingdom and Continent, and the existence of a foreign trade zone. Because the Port Authority is small compared to Boston, New York, and Montreal, it can offer immediate individual attention to shippers. The unrestricted access the Port Authority Pier offers to trucks and the proximity to the interstate highway system are major advan- tages vis-a-vis Boston, New York, and Montreal. 9 overview of Activities.Within the PPR Strengths (continued) Hapag-Lloyd's service to the UK/Continent via Halifax provides competitive service frequencies and transit times between New York, Boston and Montreal and the United Kingdom and the Continent, particularly for export ship- ments. These factors were cited as the second most important criterion by shippers for choosing ports in the 1983 Shipper survey conducted by Reebie*l .Associates. The Port Authority's ability to operate a foreign trade zone represents a long-term marketing tool for attracting additional cargoes through the Port Authority's facility. The foreign trade zone has the potential to offer shippers savings in terms of duties and inventory costs. The initial efforts of the Port Authority's marketing person have focused on establish- ing and marketing the foreign trade zone. e With the closing of the Schiavone & Sons scrap terminal in Boston, Ports- mouth has become the major New England gateway for scrap exports. Port- land, Maine, is land constrained, and therefore its ability to handle scrap is limited. Increasing competition for diversified waterfront development and the growth of containerized cargoes has drastically reduced the amount of land available for handling scrap in Boston. Consequently, Providence is the only alternative gateway to Portsmouth, and Providence's distance from the scrap-generating areas--northeastern Massachusetts, Vermont, New Hampshire, and Maine--limits its ability to compete for these cargoes. lPortsmouth Port Marketing Survey and.Strategy Study, Reebie Associates, 1983. 10 overview of Activities Within the PPR Strengths (continued) e The longshore labor force employed at the State Pier is productive and cooperative. Interviews with the Port Authority staff, John T. Clark, and Hapag-Lloyd have all indicated that the longshore workforce achieves good productivity in handling scrap and container cargoes and that they have demonstrated a high degree of flexibility in shipside and terminal cargo handling operations. 9 The existence of a productive, flexible labor force is critical to the competitiveness of the State Pier operation, particularly in regard to Portland which employs lower cost, non-union labor. Weaknesses Physical Constraints The major physical constraint to increasing cargo through the Port Author- ity facility is the lack of a second berth. This constrains the Port Authority and John T. Clark from guaranteeing berth availability to new lines or accounts potentially interested in using the Port Authority fac- ility. From the ship operator's perspective, the potential for incurring significant delays at a port due to the lack of a berth is a major crite- rion in evaluating what ports to call. e A second constraint to increasing throughput at the Port Authority facility is terminal.storage. The near doubling of scrap shipments-since the clo- sure of the Schiavone terminal in Boston, combined with ongoing container- ized cargo activities, has resulted in little room for accommodating addi- tional activity. In the short-term, terminal capacity constraints could be alleviated by using off-dock storage for containers, assuming vacant land could be located. overview of Activities Within the PPR Economic Constraints � The principal economic constraint to increasing containerized cargoes through the Port Authority facility is the current intermodal rate struc- ture in ocean shipping. The introduction of door to door intermodal rates, service contracts, the deployment of larger vessels, and the formation of load centers have all served to shift control of cargo routing decisions from shippers to ocean carriers and freight forwarders. In their desire to lower costs in response to declining freight rates, carriers are constantly seeking economies of scale. Such.actions result in the funneling of car- goes through a selected number of ports in order to increase utilization and lower fixed costs. The net result has been the introduction of ocean freight rates that are "port blind," i.e., a New England shipper pays the same rate whether his cargo is shipped via New York, Boston, or Portsmouth. � Compounding the problems posed by port blind rates is the lack of high volume shippers within the State of New Hampshire. The New Hampshire market, with the exception of the State Liquor Commission and possibly one or two others--comprises a large number of small volume shippers. This makes it difficult to generate sufficient volumes through the Port Author- ity to attract additional ocean services. To date, the volumes have been only marginallyattractive to the existing.Hapag-Lloyd feeder service. Because the New Hampshire market.is relatively small, individual shippers are potentially better off using the services of a forwarder/consolidator, who can pool multiple shipments, to achieve lower rates than routing via Portsmouth and Hapag-Lloyd. � An additional economic constraint is the lack of non-conference service via Portsmouth. Traditionaly, non-conference carriers have provided comparable service to conference carriers at discounts of 10 percent to 15 percent. The availability of non-conference service via Montreal and New York, is a further attraction to routing cargoes via these gateways as evidenced by the success of Cast Line in New England. 12 Overview of Activities Within the PPR Market Constraints e The principal market constraint is the fact that direct ocean carrier serv- ice via Portsmouth is limited to the United Kingdom/Continent via Hapag- Lloyd. New Hampshire shippers desiring to ship to and from the Mediter- ranean, the Middle East, Africa, or South America must route their cargoes via Boston, New York, or Montreal or transship via Rotterdam. The latter choice involves increased transit times and costs. e A second market constraint is lack of competition, perceived or actual, in Portsmouth. Portsmouth has one stevedore, one towing company, and one ocean carrier. This situation suggests that market pressures to keep rates low does not exist, as pointed out by several interests interviewed by TBS. This perception, whether correct or not, can only be dismissed through active marketing efforts by the Portsmouth Port Community (the Port Authority Board and its staff, John T. Clark, Portsmouth Navigation, etc.). Institutional Constraints e The major institutional constraints to attracting additional cargoes through the Port Authority facility have been the lack of financial support from the State and the terminal lease. Historically, the Port Authority has not had a marketing director, nor have adequate funds been provided to fulfill the Authority's mission "to foster and stimulate commerce and the shipment of freight through the State's ports." e Evidence of the lack of marketing surfaced during the 1983 shipper survey conducted by Reebie Associates. The survey found a very real need to "image-build" Portsmouth among New Hampshire shippers. Comments regarding the lack of container handling capabilities and reliable feedership serv- ices amplify the problem. 13 overview of Activities Within.the PPR Institutional Constraints (continued) The State has recently taken a major step to eliminate this constraint by having a full-time marketing person. The individual selected has broad experience in the business of foreign trade which should enhance the effec- tiveness of the Port's marketing efforts. 9 The terminal lease grants the John T. Clark Company exclusive control, including pricing, of the State Pier facility. The expansion or diversifi- cation of activities at the facility can only be accomplished with the cooperation of the John T. Clark Company. Interviews conducted by the consultants and the consultants' own experience have indicated that such cooperation has not always been forthcoming. SUMMARY * The PPR accommodates a large number of diverse, water-related activities6 These activities range from water-dependent industrial activities to water- enhanced tourist activities. In total, these activities account for a substantial portion of total employment within the PPR and have a signifi- cant economic impact on the region. * The New Hampshire State Port Authority facility represents the only public marine facility within the PPR. Historically, its primary function has been to handle New England's scrap metal exports and containerized general merchandise imports. 14 overview of Activities Within the PPR SUMMARY (continued) � Cargo-handling activities at the State Pier facility have more than doubled during the past seven years. This increase in activity, together with increased lease payments and escalations in other fees, has resulted in profitable operation of the facility. The profitability of the facility is expected to continue to improve due to a doubling of scrap shipments, the signing of a new five-year lease with Viking Cruises, and negotiation of a new base rent with the John T. Clark Company during 1987. � The State Pier facility possesses a number of strengths in competing for New England cargoes. These strengths include: --Specialized, individual service --Ease of access --Competitive ocean service and transit times between New England and the United Kingdom and Continent --Bulk cargo-handling capability --Productive labor force --Foreign trade zone 15 overview of Activities Within the @PR SUMMARY (continued) e However, the State Pier facility faces a number of constraints in competing for New England cargoes. These constraints include: --Physical: The lack of a second berth and terminal storage constrain the ability to contract new ocean services and expand and diversify activi- ties at the facility. --Economic: Intermodal pricing structures have shifted control of the cargo routing decision from the shipper to the ocean carrier and led to the institution of "port blind" rates which offer shippers the same rate, regardless of which port the cargo moves through. --Market: Direct ocean service via Portsmouth is restricted to the United Kingdom and Continent. Shippers moving goods between New England and other world areas must either have their goods transshipped in Europe or route them via another port. The market served by the state pier facil- ity, with few exceptions, comprises many small-volume shippers. This composition limits the ability of the Port Authority Board and its staff to attract additional ocean services and obtain competitive, volume incentive rates. --Institutional: A historical lack of financial support, particularly as it relates to marketing, on the part of the State of New Hampshire, com- bined with a terminal lease that grants exclusive control of the State Pier to the lessee, constrains the Port Authority Board and its staff's ability to effectively market the facility. Before the Port Authority Board and its staff can expand and diversify operations at the State Pier, it must first expand the facility. The present berth and terminal capacity constraints preclude the attraction of any new business. 16 Overview of Activities Within the PPR summARY (continued) e In pursuing new business, the Port Authority Board and its staff need to pursue a niche strategy, i.e., serving those customers and needs within the PPR and central New England area. Portsmouth cannot compete with Montreal, Boston, and New York for a majority of the New England container market given the nature of the New England market, ocean carrier pricing strate- gies, and the limited ocean service available to Portsmouth. e It is within the context of the strengths and constraints of the Port Authority facility and activities within the PPR that alternative develop- ment options were prepared. 17 me WE "M M MI M iM Figure II-1 DOVER PT. PORTSMOUTH HARBOR AND PISCATAQUA RIVER, NH AND ME' SHORELINE, CHANNEL, BRIDGES, MAJOR ISLANDS tLIOT C.% raw' MAINE. 1. Sp a nergy 2,, New Eligland Tank 'KITTE Y Fuel Storage Corp. .. . ....... Simplex Wire 8i 1-0 ihONWAY $RIDGE: Cable Co. 4. Public Se'rvice Co. of NH (Newington Station) BRID011 ce 'Publictervi' Co. of. NH (Schiller Station) MEMORIAL BRIDGE :..kITTERYPT. SEAVEY IS.. Nationil Gypsum Co. 7. N.H. PORT AUTHORIT 8. Viking Cruises . ........ .... Granite'6tate Minerals:- NEW . ..... 10. Heritage Cruises '11. Portsmouth -;.HAMPSHIRE Wavlga@ion Co. 12. State Fish Pler...A_@ NEW CAbTLE IS. 13. Normandead Assoc. Inc. PORTSMOUTH 18 Exhibit 11-1 PORT AUTHORITY CARGO TONNAGE (short tons) Cargo 1978 1979' 1980 1981 1982 1983 1984 Scrap metal 84,899 127,091 171,850 146,107 151,427 145,829 187,022 Containers - - - 12,992 14,595 24,305 7,793 Other 2,626 15,708 10,969 55,864 16,420 16,826 N.A. Total 87,525 142,799 182,819 214,863 182,442 186,960 194,815 N.A. = Not available. Source: Port Authority and TBS. 19 Exhibit 11-2 NEW HAMPSHIRE STATE PORT AUTHORITY REVENUE AND EXPENSES FY 1978-1984 (current dollars) FY 1978 FY 1979 FY 1980 FY 1981 FY 1982 FY 1983 FY 1984 REVENUE: Terminal $75,000 $100,708 $100,000 $100,000 $100,000 $150,000 $189,572 Other Rents 14,000 15,000 15,000 23,706 32,777 30,467 30,571 Moorings 600 12,734 17,130 16,880 16,055 42,540 59,190 Totals $89,600 $128,442 $132,130 $140,666 $148,832 $223,007 $279,333 EXPENSES: Operating Budget $26,604 $17,000 $54,986 $60,064 $61,077 $63,707 $67,215 Payment in lieu of taxes 30,000 30,000 30,000 30,000 30,000 30,000 30,000 Debt service (interest) 14,000 97,500 91,625 85,750 79,875 74,000 68,125 Totals $70,604 $144,500 $176,611 $175,814 $170,952 $167,707 $165,340 GAIN (LOSS) $18,996 $(16,058) $(44,481) $(35,148) $(22,120) $55,300 $113,993 Source: New Hampshire State Port Authority. 20 III. PREPARATION AND SELECTION OF DEVELOPMENT OPTIONS INTRODUCTION � The objective of the Task 11 analysis was to prepare six or more develop- ment options for the PPR. From this list of potential options, the Advisory Committee was to select three for detailed evaluation. � The options prepared by the consultants were based on the Task I: Assessment report and input from interviews conducted by the consultants. Economic information relating to the costs and benefits of various options represents order of magnitude estimates based on data compiled from exist- ing studies, preliminary engineering estimates developed by the consul- tants, and estimates of the potential market demand for each activity asso- ciated with a development option. The benefit data was intended to provide the Advisory Committee with an indication of the potential benefits to be realized rather than a definitive statement of existing market demand. PREPARATION OF DEVELOPMENT OPTIONS The consultants prepared 13 development options for consideration by the Advisory Committee. The options and their estimated impacts are contained in Exhibits III-1 through 111-9. Mam"IMMM"A", man, Preparation and Selection of Development.Options PREPARATION OF DEVELOPMENT OPTIONS (continued) o The Advisory Committee added three options to the consultants' list. The additional options included preparation of a marketing plan for the Port Authority Board, expansion of the existing State Fish Pier, and creation of a two-acre mixed retail and residential development. Because these options were presented by members of the Advisory Committee at the Task II review meeting, costs, benefits, and impacts were not developed. o Developments of estimated costs in most instances required the selection of a specific site--the State Pier, for example. However, since.most options could occur at one or more existing sites, the Committee was not con- strained by the consultants' site selection. SELECTION OF OPTIONS The consultants presented the results of their Task II: Preparation of Development Options to the Advisory Committee. Following a detailed dis- cussion of each option, the Advisory Committee selected the three options for which detailed evaluations were to be conducted. o In selecting the three options, each member of the Committee rated, in order of preference, the three options he or she desired to see pursued. 22 Preparation and Selection of Development Options SELECTION OF OPTIONS (continued) e The three options selected by the Advisory Committee, in ranked order, were: --l. Create a dredge spoil containment area at the State Pier. --2. Sell the Port Authority (sell the State Pier and terminate the Port Authority Board). --3. Construct a second berth with a Roll-On/Roll-Off (Ro/Ro) capability at the existing State Pier. e Following the selection of these three options, the Advisory Committee and the consultants met again to more clearly define the options to be evalu- ated. As a result of those discussions, the first and second options were amended as follows: --Containment Area: expanded to include the use of land-sourced fill as an option to using dredge spoil --Sell the Port Authority: expanded to evaluate the three options the State has for managing the State Pier facility, i.e., lease to a terminal operator (status quo), operate the facility, or sell the facility * The evaluation of the selected options are presented in Chapter IV. 23 Exhibit 111-1 TASK II: DEVELOPMENT OPTIONS COMMERCIAL MARINE Costs Benefits Impacts Development Options Pubtic/Private Public/Private Environmental Socioeconomic Management Engineering Considerations 1. Create a dredge spoil $4,000.000-$6,000,0006(P) $0b(P) Typical impacts of near- Provides substantial State directly or Access to Market Street and containment area at shore marine constructione acreage for development through a lessee to existing State Pier State Pier Displacement or environ- Requires negotia- facility mental wetlands tion with terminal Alternative uses operator 2. Create containment $7,000,000-$8,000,0006(p) $1 ob(p) Typical impacts of near- ' Provides substantial State directly or Access to Market Street and area, including a shore marine constructionL acreage for development through a lessee to existing State Pier 700-foot multi- facility purpose berth Displacement of environ- Requires negotia- mental wetlands tion with terminal Alternative uses operator P = Public. 6Cost depends on type of construction an d intended use. bNo benefits pending development of the containment area for one or more water dependent uses. An alternative benefit of the containment area would be its sale value, i.e., an estimated 12 acres or land 0 $300,060 to $1,000,000 per acre, depending on the use for which it was sold. Clemporery increase in turbidity of water, disruption or benthic organisms, pile driving noisest ate. Source: TBS. 24 Exhibit 111-2 TASK 11: DEVELOPMENT OPTIONS COMMERCIAL MARINE Costs Benefits Impacts Development Options Public/Private Public/Private Envivarinental Socioeconomic Management Engineering Considerations 3. Add Ro/Ro capability $2,800,0008(P) $22 'OOOb( P)-$36,4Mc(P) Typical impacts of near- Potential increase in State: Directly or Location of alignment at existing State Pier shore marine construction ocean services and traf- through a lessee alternatives fic to NH Increased truck traffic Negotiation with Construction alternatives on Market Street terminal operator Accomodate stern and side romp vessels P = Public. aIncludes pile supported dock with access bridge to land, 44,840 square feet at $62.50 per square foot. bMinimum revenue realized from tourboat lease of one-acre parcel at $0.50/square foot, assuming no Ro/Ro service is attracted to Portsmouth. cPotential dockage/wharfage revenues to Port Authority if a weekly Ro/Ro service looding/discharging 60 traitors per week were attracted to Portsmouth. Yhe market potential for such service has not been determined. Source: TBS. 25 Exhibit 111-3 TASK Ili DEVELOPMENT OPTIONS COMMERCIAL MARINE Costs Benefits Impacts Development Options Public/Private Public/Private Environmental Socioeconomic Management Engineering Considerations 4. Construct second- $8,6W,ODOa(P) $25,000 b(P) Typical impacts of near- Potential increase in State; Directly or Location of alignment berth at State Pier share marine construction ocean services and traffic through a lessee alternatives facility to NH Displacement of environ- Requires negotia- Construction alternatives m:ntal habitats tion with terminal operator 0 edging, increased truck traffic an Market Street 5. Construct second $1O'5M'OO0a(P) $22 Wob(p)-$36,400c(P) Typical impacts of near- Potential increase in State: Directly or Location of alignment berth, including shore marine construction ocean services and traffic through a lessee alternatives Ro/Ro capability, at to NH State Pier facility Displacement of environ- Requires negotia- Construction alternatives is ntal habitats tion with terminal D:.dging, increased truck operator traffic on Market Street P = Public. a Aseumes 600-foot berth at $14,330/lineal foot including provision for some backup land. Addition of Ro/Ro capability adds an estimated $1.9 million tocost. bMinimum revenue realized from tourboat lease of one-scre parcel at $0.50/square foot and $3,0130 in dockage and wharfage fees from four calls by a coastal cruise ship. ePotential dockage/wharfage revenues to Port Authority if a weekly Ro/Ro service loading/discharging 60 trailers per week was attracted to Portsmouth. The market potential for such service has not been determined. Source: TBS. 26 Exhibit 111-4 TASK 11: DEVELOPMENT OPTIONS MARINE COMMERCIAL Costs Benefits Imparts Development Options Public/Private Public/Private Environmental Socioeconomic Management Engineering Considerations 6. Sale of State Pier No direct expenditures $3,600,000412,000,0006(P) Dependent on use Lose of international Requires legislative None facility required gateway for NH commerce action Reduction in state can- Requires agreement trolled waterfront of terminal operator property prior to 1992 P = Public. aSale of an estimated 12 acres at $300,000 to $1,000,000 per acre, depending an the use for which it was sold. Source: TBS. 27 Exhibit 111-5 TASK 11: DEVELOPMENT OPTIONS COMMERCIAL MARINE--NON CARGO RELATED Costs Benefits impacts Engineering Development Option Public/Private Public/Private Environmental Socioeconomic Management Consideration 7. Provide for combined $330,000' (P) $108,000b (R) Typical impacts of near- Increase waterborne State: Directly or via None party boat and lobster shore marine construction recreational activity lessee boat facility at Pierce Island $32,370' (P) Increased public/pedes- Increase commercial trien traffic and parking fishing activity on Pierce Island "ition with private facilities COMPL R = Private. P z Public. : 1001 x 40' dock 0 $50/ft2 berth; dredging of 3,000 cubic yards 4 $20/yard; dockside support facilities 9 $70,000. Gross revenues to private party boat operator from 30 participants, two trips per day, $15 per person, and 120 days. Amortization of $330,000 over 20 years at 7.5 percent interest. Revenues from lobstering, which would most likely be based an a percentage of the ad valorem value of the landed catch, are not included. 28 Exhibit 111-6 TASK Itt DEVELOPMENT OPTIONS COMMERCIAL MARINE--NON CARGO Costs Benefite/year impacts Engineering Development Option Public/Private Public/Private Environmental Socioeconomic Management Consideration B. Provide for addi- $650,000a(p) $142,500'(R) Typical impacts of near- Economic impact of pas- States Directly or None tional tour boat b share marine construction senger expenditures on through lessee activity at State $22,000 (P) local economy Pier increased vechile and Potential conflict with pedestrian traffic construction of second berth Parking for cars 9. Provide for combina- $1,360, DODd(P) $142,50OF(R) Some as above Sane as above Some as above Same as above tion cruise/tour boat activity $25,000'(P) P =Aublic. R =Private. a300-lineal-foot bulkhead 0 $1,900/lineal foot; dredging 3,000 cubic yards 0 $20/cubic yard; $20,000 contingencies. bLease revenues from one acre. cAnnual gross revenue projections based an 7,500 passengers per year 0 $19 per passenger. d500-lineal-foot bulkhead 9 $2,300/lineal foot; dredging 8,000 cubic yards 0 S20/cubic yard; $50,000 contingencies. aSame as footnote b, plus $3,000 in dockage/wharfage fees from four calls per annum by coastal cruise ship. the market potential for such service has not been determined. Note. These options are in addition to Viking Cruises' Phase I development of Barker Wharf. Source: 18S. 29 Exhibit 111-7 TASK Ili DEVELOPMENT OPTIONS RECREATIONAL BOATING Costs Benefits Impacts Engineerinn Development Option Public/Private Public/Private Environmental Socioeconomic Management Consideration 10. Expand Pierce Island $50,0001(p) $3,600/yrb(P) (public use) Oil spills Increased water access for City None boat ramp facility recreational use (301 x 40* addition $4,000/yrc(P) (private use) Increased automobile and parking for 24 traffic to and from care and trailers) Pierce Island increased engine noise P = Public. R = Private. aIncludes clearing, grabbingo filll parking lot grading; driveway/parking paving. bPublic use of ramp S2/bost x 120 days 0 50% utilization for 30 boats. cMarins owner use of public ramp $5/boat x 400 boats/year, two times/yessr. Sourest TBS. 30 Exhibit 111-8 TASK 11: DEVELOPMENT OPTIONS RECREATIONAL BOATING Costs Benefits Impacts Engineering Development Option PubLic/Private Public/Private Environmental Socioeconomic Management Consideration II. Provide for recrea- $1,590,0006(p) $115,000 b(R) Typical impacts of near- Increase in retail sales States Through lessee None tional boating shore marine construction to community and marine activities at Pierce businesses Islands 150-911p $156,008c(P) Additional ri .ver traffic Significant increases in marine with support facilities Risk of oil spills traffic and parking to/ from Pierce Island R o Private. P aPublic . 8150 slips 9 estimated $7,000/slip; $280,000 for shoreside facilities; $260,000 for breakwaters and beach protection. bGrosa revenues of $91,000 from 140 slips 8 $650 each for seasonal rental and 10 transient ships for $24,090. cAmortization of State's Investment based on 20 years at 7.5 percent per year. Source: TBS. 31 Exhibit 111-9 TASX 11: DEVELOPMENT OPTIONS RECREATIONAL Costs Benefits impacts Engineering Development Options Public/Private Public/Private Environmental socioeconomic Management Consideration 12. Create public walk- $900,000'(P) increased revenue to Typical impacts of near- increased waterfront City None way local merchants shore marine constructions access by public increased pedestrian traffic 13. Create public walk- $1,250,000 ts (P) $24,000/yrc(saae 1) P/R Provide pumpout station increased waterfront City or States Directly None d one access by public for way with marina S18,000/yr (transient) P/R or through Issues Risk of oil spills recreational use Engine noise Parking for 40 care P = Public. R = Private. % $50/ft2 x 6001 x 301. '$7,000/olip including sewer/water x 50 slips in addition to cost of walkway per footnotes. C40 slips a $600/asason. d10 transient slips, 50% occupancy, $30/night, 120 days. eTemporary increased turbidity, disruption of benthic organisms, pite driving noise, etc. Source: TBS. 32 IV. EVALUATION OF SELECTED OPTIONS INTRODUCTION � Following the Advisory Committee's selection of the three development options for further study, the consultants conducted a detailed evaluation of each option. The evaluations included assessments of the market poten- tial and the engineering, environmental, legislative, financial, and managerial considerations associated with each option. � Upon completion of the detailed evaluations, the consultants presented their findings to the Advisory Committee. Based on the presentation, the Advisory Committee selected two options.for which implementation plans were then prepared. � This chapter summarizes the detailed evaluation of the selected options. Evaluation of Selected Options DETAILED EVALUATIONS Market Potential e Creation of the 11.5-acre containment site would eliminate the major physical constraints at the present State Pier facility. The containment site would provide three additional berths capable of accommodating the largest oceangoing vessels able to transit the Piscataqua River, coastal cruise ships, visiting naval and tall ships, and tour boats, and provide berthing for fishing vessels. It would also double the acreage of the State Pier facility. e The containment area thus provides the greatest potential for expanding and diversifying activities at the State Pier. e An assessment of the revenue generating potential of the expanded State Pier facility, based on construction of the containment area, is presented in Exhibit IV-1. The activities and their revenue generating potential are based on data compiled by the consultants through research and interviews. The data show that an expanded facility has the potential to generate approximately $1.0 million in revenue for the State per year at today's rates. The data exclude the impact of future escalations that might be included in property leases. This is in contrast to revenues of $0.3 million in FY1984. e The exhibit also shows that to realize this potential, the facility would have to diversify its revenue base. Cargo activities alone do not provide sufficient contribution to cover the capital investment. Conversely, leases such as those to Viking Cruises and to industrial users would provide significant contribution. 34 Evaluation of Selected Options Market Potential (continued) e Addition of a second berth with a Ro/Ro handling capability alleviates the present berth constraint but provides little additional terminal capacity to accommodate expanding existing activities or diversifying into new activities. Under this option, the additional bulk cargo, marina, commer- cial fishing, and industrial lease activities displayed in Exhibit IV-1 could not be accommodated. Thus, the potential revenue generating capacity of this option is approximately $0.4 million. e Although the Port Authority's staff has occasionally received inquiries regarding the State Pier's Ro/Ro handling capabilities, the consultants' analysis identified no specific opportunities at the present time, and therefore no provision was made for including such activities in the revenue analysis. e Revenue generating potential for the management option varies depending on which of the three management arrangements is selected. If the facility were, sold, the sale price would range from approximately $3.6 million to $12.0 million, depending on the intended use. The $3.6 million figure assumes the State Pier would continue to be used as an industrial, water- dependent facility, while the $12.0 million estimate assumes a combined retail-residential use. e Under the operate option, the State would receive revenues in excess of the $1.0 million displayed in Exhibit IV-1 since the State would be providing additional services, i.e., vessel loading/unloading, and terminal services. How much additional revenue would be a function of competitive rate struc- tures in Portland and Boston. e The revenue potential under the lease option is represented by the data presented in Exhibit IV-1. 35 Evaluation of Selected Options Engineering o Neither the containment area nor the second berth options poses any significant engineering problems. e Preliminary engineering work, initiated under contract to Kimball Chase, has indicated the project is feasible from an engineering perspective. The feasibility of adding a second berth with a Ro/Ro capability was positively determined in a 1984 study conducted by the engineering firm of C. E. McGuire.1 e Estimated construction costs for the containment area are shown in the following table. lPreliminary Concepts Phase Engineering Report for the Proposed Port Authority New Wharf, C. E. McGuire, 1984. 36 mwww@ M,Mm@ womsw M@= mom Men Evaluation of Selected.options Engineering (continued) Table IV-1 COST OF CONSTRUCTION AND IMPROVEMENTS OF NEW TERMINAL IN CONTAINMENT AREAS NORTH OF MAINE-NEW HAMPSHIRE INTERSTATE BRIDGE (Option 1) Construction Cost Site No.1 Site No. 2 Other Total Containment Site $ 8,450,000 $1,650,000 $10,100,000 Bridge $400,000 400,000 Spoil Transport & Placement 510,000 153,000 663,000 Total $ 8,960,000 $1,803,000 $400,000 $11,163,000 Improvements Cost Dredging $ 470,000 $ 220,000 $ 690,000 Site work (utilities, security, surfacing, drainage) 900,000 140,000 1,040,000 Apron, fenders, etc. 1,340,000 220,000 1,560,000 Transit shed 1,000,000 1,000,000 Total $ 3,710,000 $ 580,000 $ 4,290,000 Total Cost $12,670,000 $2,383,000 $400,000 $15,45j,000* *Based on use of dredge spoil. If land-sourced fill is used, the total estimated cost is $17.3 million, an increase of $1.9 million due to the higher cost of land-sourced fill. Source: TBS. 37 Evaluation of Selected Options Engineering (continued) e The preliminary estimate for constructing the containment area, using dredge spoil as fill, is $15.5 million dollars. Annual amortization costs total $1.5 million, based on 20-year general obligation bonds and an interest rate of 7.5 percent. If the containment structure cannot be completed in time to use spoil dredged from the Piscataqua River as fill, the option exists to use land- sourced fill. Use of land-sourced fill would increase the cost of the project by $1.9 million to $17.3 million, due to the higher price and transportation costs associated with land-sourced fill. e Incremental to the costs shown in Table IV-1 would be the annual capital amortization costs associated with the existing facility ($0.1 million) and amortization of capital improvements ($0.3 million) associated with the non-cargo opportunities displayed in Exhibit IV-1. The total capital outlays for the containment area option are $15.7 million if dredge spoil is used as fill and $17.6 million if land-sourced fill is used. e The estimated capital costs for adding a second berth with a Ro/Ro capabil- ity are $11.0 million (see Table IV-2). On an' annual basis, capital amor- tization costs would total $1.1 million (20-year general obligation bonds and a 7.5 percent interest rate). 38 NO W, I an 09 at" go M1 I=1 an NO am W. an am no a- W, Evaluation of Selected options Engineering (continued) 0 There are no engineering considerations associated with any of the three management options. However, if the State chose to operate the facility, the State would need to invest approximately $2.0 million in cargo- handling equipment (mobile cranes, forklift trucks, etc.) Table IV-2 COST OF CONSTRUCTION AND IMPROVEMENTS OF SECOND BERTH AT EXISTING STATE PIER (Option 2) Construction Cost Foundation $2,075,000 Curtain wall 2,810,000 Superstructure 3,105,000 Earthwork 1,500,000 Total $9,490,000 Improvements Cost Dredging $ 535,000 Fender system, etc. 350,000 Utilities 250,000 Miscellaneous site work 375,000 Total $1,510,000 Total Cost $11,000,000 Source: TBS 3 9 Im no a Evaluation of Selected options Environmental Discussions with the Army Corps of Engineers' regulatory branch, the branch responsible for issuing federal permits, indicated that the containment area permitting process could be lengthy for two reasons. Those reasons are (1) the possible existence of wildlife species in the proposed contain- ment site and (2) the magnitude of the project (11.5 acres of new land) may require the filing of an Environmental Impact Statement (EIS). � Kimball Chase's containment area contract with the State includes the development and presentation of'all research, analysis, and findings to support the permitting process. The actual permit application process would be handled by the Port Authority Board and its staff. � Discussions with members of the Advisory Committee, Port Authority staff, and Kimball Chase have indicated that the State and local permitting processes are expected to require less time than the federal process. � The permitting. process is critical to the timing of the completion and therefore the ultimate cost of the containment area. If the process is lengthy, the containment area may not be able to be completed in time to use the dredge spoil from the Piscataqua River dredging project. If this occurs land-sourced fill will be required, which would increase construc- tion costs by $1.9 million, or 12.percent. � The permitting process for adding the second berth would be the same as that for the containment area. However, a formal EIS would in all likeli- hood not be required. Consequently, the process would be shorter and less complex. 40 Evaluation of Selected.Options Environmental (continued) The only potential environmental issue associated with the management options would be the environmental impact of the sale of the State Pier on the Portsmouth community. Responsibility for addressing this issue would be a matter to be negotiated between the State and the City of Portsmouth. Legislative The legislative process encompasses the appropriation of money to fund market studies, preliminary design and permitting, final design, prepara- tion of specifications and bids, and construction of both the containment structure and the second berth. � The present Kimball Chase contract includes both preliminary design and permitting. The preliminary d5sign for the second berth is contained in the 1984 C. E. McGuire report, although it may require some updating. � Legislative action would be required to amend the Port Authority's enabling legislation if the Port Authority Board were to operate the facility. Legislative action to repeal the enabling legislation would be required if the State were to sell the State Pier facility and terminate the Port Authority Board. � Continuance of the present leasing policy requires no legislative action. 2Preliminary Concepts Phase Eniineering Report for the Proposed Port Authority ife-wWharf, C. E. McGuire, 19H4. 41 Evaluation of Selected Options Financial o Both the containment area and second berth projects would be funded through the issuance of general obligation bonds by the State Treasury. Currently these bonds are issued for a 20-year period at rates averaging 7.5 percent. Management � Before proceeding with construction of either the containment area or second berth projects, the Port.Authority Board would first have to reach an agreement with the John T. Clark Company regarding interim (through 1992) jurisdiction of the expanded facility i.e., the new facilities plus the existing facility. The present lease, which ends in 1992, grants Clark exclusive use of the State Pier facility in return for payment of a base rent and a percentage of dockage and wharfage fees. � The Port Authority Board and Clark would need to either amend the present lease to clearly define who would have operating and pricing rights over which areas of the expanded facility until 1992, or negotiate a new lease. Once these issues are addressed, construction can proceed. � Depending on the resolution of these issues, the Port Authority Board will have the option to lease, to Clark or another operator, part or all of the facility, or to operate it. � In the long-term, i.e., after the present lease expires in 1992, the Port Authority Board has three options for managing the State Pier facility. It can continue to lease it to a terminal operator, operate it, or sell it. � An assessment of benefits and risks of each option is shown in Table IV-3. 42 Evaluation of Selected options Management (continued) Table IV-3 POTENTIAL BENEFITS AND RISKS OF ALTERNATIVE MANAGEMENT OPTIONS L ease Operate Sell Benefits Increased revenue Maximum revenue generating potential One-time capital gain Minimum financial exposure Increased control over pricing, marketing, operating Risks Lack of control Significant capital investment Potential lost revenue Potential loss of business Additional staff required to users (Clark, (Scrap, Hapag-Lloyd) Maximum financial exposure Trucking Companies) Potential loss of business Loss of jobs (Scrap, Hapag-Lloyd) Loss of revenues to local business Source: TBS. 43 Evaluation of Selected options Summary The containment area option provides the greatest opportunity for expanding and diversifying activities and revenues at the State Pier. It also has the least downside risk,. since all or most of the State's investment could be recovered through sale of the property. The degree to which the State could recover its investment would be determined by the sale price, which in turn would be a function of the intended use of the property. � Each management option evaluated by the consultants is capable of being pursued independently of the capital development options. The three man- agement options can also be pursued simultaneously to determine which option provides the greatest benefit to the PPR and the State. However, none of the management options, as they relate to managing the total facility, can be implemented prior to the expiration of the existing lease in 1992. � Based on the consultants' detailed evaluation, the Advisory Committee directed the consultants to prepare implementation plans for the contain- ment area and the management options. The plans are presented in Chapter V. 44 Exhibit IV-1 REVENUE POTENTIAL FOR AN EXPANDED STATE PIER FACILITY 1986 Basis Cargo Activity Revenue Basis Potential Demand Annual Revenues Scrap metal $1500000 base revenue 300,000 tons $150,0008 80% of dockage/wharfage 30,720 in excess of $150*000 Containers $7/20-ft. container 100 20-ft. containers 56 b Ob $14/40-ft. container 900 40-ft. containers 10, 080 Bulk cargo $130,000 base lease 132,OOOC Additional $0.25/ton dockage 62,500 Miscellaneous revenues 10,000d Subtotal Cargo $395,860 Non-Cargo Commercial fishing $650/vessel 7 vessels 4,550 Viking Cruises $27,500 base revenue - 27,500 $0.75/possonger 100,000 passengers 75,000 Additional river tour boat a (1/2 basis for Viking $13,750 base rent 13,750 Cruises) $.75 per passenger 37,500 Coastal cruise vessels a Docking facility for 300- (300-foot x $1.50 per 4,500 foot vessel foot x 10 weekly calls) Marine and facilities for a Docking facility for (10 baste x 30 feet x 9,000 visiting ships (naval and 10 recreational boats $30 per foot) tell ships) Lr) a 5 transient boats (6 weeks x 5 baste x 1,350 30 feet x $1.50 per foot) a Visiting ship/tall ship (200-foot vessel x 1,500 $1.50 per foot x 5 calls) Industrial and commercial a Eight acres industrial/ $43,650 per acre ($1.00 per 349,200 losses commercial land (existing square foot) site, unimproved) a Two acres industrial use $87,300 per acre ($2.00 per 174,600 (site #2--containment square foot) Ores) Subtotal non-cargo $690,450 Grand Total $1,094,310 @as;d an current Port Authority lease with John T. Clark. So orcent of dockage and wharfage fees from Yankee Clipper. Ceased on estimated annual per acre asiortization cost of $1.5 million and 11.5 acres. dDockage from miscellaneous vessel calls and few. M ote- Based an Option 1: Creation of the 11.5-acre containment site. ources TBS. M, No 5" M, No ON am 09 M aw, no M V. INPLEMENTATION PLANS CONTAINMENT AREA e The Port Authority Board and its staff should take the following steps to implement option 1: Creation of a Containment Area: --l) Petition the Governor for immediate release of funds appropriated for the Kimball Chase preliminary design study. This action will complete design of the containment structure and permitting process. --2) Enlist the support of the Department of Public Works, the Department of Resources and Economic Development, and local industry to lobby the coastal delegation to introduce fast track capital appropriations legislation to contingently fund final design, preparation of bids, and construction of the containment area, pending the results of a comprehensive market study by the Port Authority Board and its staff. --3) Undertake a comprehensive market study for,the State Pier facility. Specific areas of focus should include: e Bulk cargoes e Tour boats e Cruise vessels Industrial lessees e New Hampshire State Liquor Commission Implementation Plans CONTAINMENT AREA (continued) The study should identify market opportunities that both diversify the revenue base of the Port Authority and contribute to the amortization of the expanded facility, preferably through mid- to long-term leases. The market study can be undertaken.by either the Port Authority staff or a consultant. Given the pending turnover in the Port Authority staff, the latter option may be more feasible. However, before a consultant could be hired, funds would need to be procured. Because the marketing study will be a major determinant of the project's feasibility, it should be completed as soon as possible and no later than completion of the preliminary design and permitting analyses. Therefore, funding should be-sought from the Coastal Zone Management Program-306 Funds. The alternative option is the fast track capital appropriations process in the State legislature, which would greatly extend the time to complete the market study. --4) Initiate discussions with the John T. Clark Company in regards to managing the expanded facility. The discussions could be integrated with the upcoming negotiations on amending the payment terms o-f the existing lease. --5) Upon completion of the market study, conduct a comprehensive cost- benefit analysis of the containment project--assuming negotiations with the Clark Company are proceeding favorably. The study should determine the total economic benefits--direct, indirect, and induced-- in relation to total fixed and variable cost. Based on this analysis,. a recommendation should be made either to proceed or to terminate the containment project. The decision to proceed should be based, to the extent it is possible, on commitments (i.e., leases), from users. 47 Implementation Plans CONTAINMENT AREA (continued) --6) If the Port Authority Board decides and the Executive Branch agrees to proceed with the containment area, the State should immediately release contingently appropriated funds to fund final design and specifications, bidding, and construction. --7) Immediately upon deciding to proceed with construction, seek as many commitments as possible from the users targeted during the market study. --8) Investigate interim options for managing the facility--principally to lease or operate it. The steps to be taken in investigating these options are outlined below in the Management Implementation Plan. MANAGEMENT IMPLEMENTATION PLAN e Beginning in 1989, three years before the Clark lease expires, the Port Authority Board should undertake a comprehensive analysis of the costs and benefits that would accrue to the State and local community under each of the three management options. e Specific steps to be taken in exploring each option are outlined in the following sections: Lease: 1) The Port Authority Board should actively market the State Pier facility to a number of stevedore companies, including John T. Clark. This effort should focus on soliciting their interest and discussing alternative lease terms and conditions. 48 Implementation Plans 14ANAGEMENT IMPLEMENTATION PLAN (continued) 2) The Port Authority Board should review existing terminal leases in other New England ports with particular emphasis on Portland, Boston, Providence, New London, and New Haven. The Board should also selectively revie'w leases in other major ports. This review would be meant to identify alternative methods for maximizing cargo throughput, employment, and financial return to the State and local community. 3) One year prior to expiration of the lease, the Port Authority Board should have the State Pier facility appraised by two or three firms experienced in the appraisal of marine terminal facilities. The purpose of the appraisals would be the determination of its market. value--both from a revenue producing and sales perspective. Also during this period, the Port Authority Board should prepare a bid proposal to lease the facility, enter detailed negotiations with qIualified firms, conduct reference checks, examine each firm's commitments in other competing ports, and conduct pro forma finan- cial analyses of competing bids to determine which bid maximizes cargo throughput and yields the highest economic return. Operate: 1) Two years prior to the expiration of the Clark lease, the Port Authority Board should conduct a detailed feasibility analysis of operating the facility. The analysis should identify capital investment, manpower, and legislative requirements. 49 Implementation Plans MANAGEMENT IMPLEMENTATION PLAN (continued) 2) Simultaneously,.the Port Authority Board should initiate contact with the major users of the Port to explore both their service requirements and costs in using Portsmouth. The purpose of these discussions would be to determine the range of services and rates that the Port Authority Board must provide in order to retain existing port users. 3) During this period, the Port Authority Board should also explore the services and costs at competing ports for the purpose of assessing the ability of the Board to provide competitive service. 4) The Port Authority Board should develop pro forma financial analyses to determine the expected financial return to the State from operating the facility. Sell: 1) Property appraisal--this step would coincide with Step 3 of the lease option. The Port Authority Board, in conjunction with the Governor's office and the City of Portsmouth, should establish criteria which would govern the future use of the facility after its sale. 3) Coincidental to soliciting bids to operate the facility, the Port Authority Board should explore firms' interests in acquiring the facility, within the context of the use criteria established above. 50 M =men= M Implementation Plans MANAGEMENT IMPLEMENTATION PLAN (continued) � Having completed the above steps, the Port Authority Board should conduct a pro forma cost-benefit analysis of each management option. The study should focus on quantifying the net direct and indirect economic benefits of each alternative to determine which alternative yields thegreatest benefit to the State and local community. � Specific issues to be addressed would include: --Revenue: what is the impact of each option on total revenues to port industries and users, the State, and the local community? --Employment: what is the impact on employment levels in the State and the local community? --Income: what is the impact on income to the State and local community? 51 VI. RECOMMENDATIONS DEVELOPMENT � The consultants recommend that the State pursue, on a preliminary basis, the creation of the containment area. Specific steps to be taken, as outlined in the implementation plan are: 1) Proceed with the preliminary engineering and permitting analyses (Kimball Chase) that were suspended pending completion of this study. 2) Initiate a market study to determine the potential for recovering the State's capital investment in the containment area. In order to expedite completion of the study, the State should seek funding from the Coastal Zone Management Program-306 Funds. if such funds are not available, fast track capital appropriations should be sought. 3) Initiate negotiations with the John T. Clark Company regarding interim (until 1992) management of the expanded facility. 4) Coincidental to the Clark negotiations, begin to analyze the costs and benefits of leasing versus managing the facility. This recommendation assumes Clark does not exercise the option to lease and operate the entire expanded facility. � Upon completion of the market study, the Port Authority Board and its staff should determine the financial feasibility of the containment project and recommend whether to proceed or discontinue pursuit of this option. Recommendations Marketing o As part of the marketing study, the following actions should be taken: 1) The customer record card file should be updated using importer and exporter directories published by the State Office of Economic Devel- opment. Having updated the files, a survey questionnaire should b6 developed and mailed to validate which companies identified are, in fact, importing or exporting, where they ship to/from, which ports they use, and the criteria they use in routing their cargoes. 2) Each company that imports or exports should be contacted to ensure they are receiving satisfactory service if they use Portsmouth, or to encourage them to use Portsmouth if they are using an alternative port. 3) An effort designed to attract additional bulk cargo opportunities to the port should be initiated--particularly in anticipation of the potential construction of the containment area. The effort should focus on bulk cargoes currently moving through-Boston, and identify industries within the states of Maine, Vermont, and New Hampshire that offer import or export potential. 4) The Port Authority Board, in conjunction with Viking Cruises, should contact those cruise lines that have expressed an interest in calling at Portsmouth. These contacts should identify the services and facil- ities these lines may require and investigate the potential for pro- viding such facilities. 5) Discussions with Portsmouth Cruises should be initiated regarding locating their operation at the State Pier facility. 53 Recommendations Marketin_q (continued) 6) Discussions with the Portsmouth Co-op should be initiated regarding the need for supplemental facilities that could be provided at the containment site. 7) The Port Authority Board, in conjunction with the City of Portsmouth and the Portsmouth Chamber of Commerce, should explore the potential for attracting industrial lessees to the State Pier facility in anticipation of the containment area being built. While the emphasis of this effort should be on water-dependent and water-related activi- ties, other potential users should not be excluded. 54 = r_- I =1., = 1=1 = = C-1 = 17-1 ED (= = = [-= - = = =-] CTR LIBRARY 3 6668 14111'580 0,